Skip to main content

tv   Power Lunch  CNBC  June 24, 2015 1:00pm-3:01pm EDT

1:00 pm
>> valuing instagram, all that stuff. >> absolutely. >> i'm going to give you what i'll give you tomorrow. health care. supreme court decision comes out on the 30th in terms of the affordable care act. i think you want to start setting up for that. thanks to all of you. that's all for us. "power lunch" begins now. >> announcer: halftime is over. "power lunch" and the second half of the trading day start right now. hello, everybody. i'm mandy drury with brian sullivan because tyler is off again today. instead of worrying about greece, maybe the global markets should be looking to another country instead? that's just ahead. netflix a huge stock split. the stock is up facebook at an all-time high. yahoo! not the case at all. money and marriage. new information today on how honest we are, what we hide and how we do it. are you really 100% financially faithful? we'll discuss. we begin with the ongoing drama in greece where stalks
1:01 pm
have been under pressure here in the united states after greece's latest reform plan was rejected by some european lenders. a key sticking point -- increasing uncertainty as greece fast approaches the june 30th deadline. the dow is down by 121 points right now. cnbc's steve sedgwick is live in athens. steve, what are you hearing now? what's the latest? >> reporter: well mandy, i think the brilliance of the markets were taking on at the start of the week when they thought they had a deal was a little bit too much. we thought there were just a couple of sticking points between the greeks and the ecb and the european commission and of course the imf. the imf was very silent. now it seems the imf is playing hard cop here and has problems over tax, has problems over welfare spending has problems over defense spending has problems over pensions. whole host of issues which then greece turns around and said this is absolutely absurd. so the problem for tsipras is
1:02 pm
absolutely enormous. he has to cut a deal with creditors who want more austerity when he's promised the gleam people and the parliamentarians behind me that he's not going to give another inch that he's given his best to the shot creditors already. say he cuts a deal within the next 24 hours. even if he gets that deal he's got to come back to a very split population, a very split parliament and a very split own party and say, look guys we've had to give a little bit more. we know his coalition partners have already said hang on a second you're giving ground on v.a.t. for it the islands. we couldn't vote for it. we know the left wing of his party is very hard on giving any austerity. they called this a suicide note because they were voted in to say so more to austerity. he has to go to the center and to a pro-europe group. he has to go possibly to new democracy. he's going to shift to the right, shift to the center if
1:03 pm
he's going to get this deal done domestically. that's a massive "if. kwpts the that imf money is due on tuesday but it looks like it's a farfetched scenario at the moment. quickly, guys zmh just moments august haltedgo halted for news. let's see how the overall markets are playing out. dow down triple digits. we've been losing steam -- is this all about sort of these rumors and talks coming out of greece? >> no not entirely. let's take a look brian, at the s&p 500. yes, there's greece drama and that definitely weighed on the markets early on but carl icahn coming out in the middle of the morning saying that stocks are overvalued i think definitely had an influence. we just had him on "fast money." hope you were watching him with scott and the gang. i think that was a factor.
1:04 pm
mr. icahn was particularly worried about high-yield etfs. they're down today. though not dramatically. still the trend is definitely a bit to the downside. what's kind of off here is the whole kind of risk-off day. your high-beta etfs, biotech etfs, cyber security etfs, oil and glassics piration the xop, that move a lot on a daily basis are down a little bit more than the rest of the market. elsewhere though pockets of strength. home builders. great numbers from lennar. just really good numbers. up 8.1% a tremendous increase in sales. that drove the bottom line. new orders up 18%. that was a big beat as well. all the home builders are doing well. lennar's up. these stocks nearing new highs. there's your one bright spot on the day. we talked about bangs hitting huge highs. huge rallies in the bank stocks all down dotoday.
1:05 pm
kudos for deutsche bank downgrading citi group saying what we're saying. stocks are up 20%. we will talk about whether there's still vl left in owning these bank stocks in the next hour. meantime a news alert in the bond market right now, 5-year notes up for auction. we talk about this lack of liquidity in the bond market lately. what's demand like? >> demand was definitely a bit below average. 35 billion 5-year notes hit the street about two minutes ago. yield 1.71%. the bid side to the one issued market was 1.70 and a half. looks to me like 1.70s were trading. tail off a bit. if we look at internals, 2.39 bid to cover is a little light. 56.6 on indirect close to 10-auction average. 5.6 on directs, a bit below the 10-auction arch. every internal is just a little
1:06 pm
off. 1.7 1 1.71%, c-minus. tomorrow last for the 90 billion in coupon supply with 29 billion 7-year notes. >> thank you, ricky. c-minus for the 5s. yesterday for the 2s it was a b-minus. we'll see what tomorrow brings. greece has many on wall street concerned. some are starting to say that china might be the one to worry about. shanghai index up 2.5% last night after falling 13% last week. let's bring in cnbc contributor ron insana. i was asking our guests this exact thing monday. hair is coming out of the shanghai market pretty damn fast. the worse o'weekly loss since 2008 last week. >> shenzhen at well. that market is dominated by individual investors who are buying stock on margin. there's about a million brokerage accounts a week being opened up by individuals who have precious few options. they can go to macao and gamble -- >> it sort of feels like the
1:07 pm
late '80s in japan. >> it is 1989 in japan. that's what we're saying today about china's dominance and in some ways -- in japan's case mercantile system in china's case, state-controlled system. when you take apart the chinese economy it is not that strong there is a lot of overcapacity. one read complained that i conflated our debt levels with total debt levels in china. but their debt is different than ours. if you look at state-owned enterprises, their corporate debt is government debt. municipal debt is what the government is buying there as part of their qe. debt levels are actually scarier in china than here in the united states. >> an important point for our viewers, understanding the differences between the indexes. shenzhen is sort of compared to the nasdaq. then you have the shanghai then the hang seng in hong kong which is sort of their dow. in china we have to look at what index and why. correct? >> yeah. shanghai was about to be included in the msci world index, then there was a deferral
1:08 pm
on that because their regulatory system -- >> so how much of that was to blame for the 13% drop last week? >> might have been a big part of it. >> at any point along the way when central banks are easing when the government's trying to simulate the economy you don't want to fight too hard. but by the same token this market is selling at richer levels than the u.s. >> china may boom and become the greatest success story in the history -- >> it already did. >> but the thing that i really -- you had a point about china. the average income in china is about $5,000 u.s. a year. 100 million households in china live on less than $1,000 u.s. a year. >> 800 million people live on $1 to $2 a day. >> there is a big disconnect. >> it seems to almost be entirely real estate and export related. >> they have excess capacity in all those areas. they have 65 million pun occupied homes. they have entire towns that are empty. excess export capacity. >> and millions more unmarried
1:09 pm
20 and 30-year-old men because they're missing women from the one-child policy. >> they have a huge demographic problem. >> who are looking up at million dollar skyscrapers and wondering why they don't have a job or a wife or a child. >> they can buy a wife or child. it does happen. we'll see whether that has an impact -- >> almost like "live with brian and mandy lee." president obama speaking a short while ago announcing a major change to u.s. ransom policy. ramifications could be huge. eamon javers is live at the white house with details. >> reporter: hi, brian. the president announcing a new executive order here and the big change here is that the united states says it is no longer going to tell the families of those people who have been taken hostage that they can't communicate with or negotiate with those hostage takers. in the fast some of those families have complained that they've been threatened with prosecution by the united states government under anti-terrorism financing laws if they paid ran
1:10 pm
ransoms or negotiated. that's no longer going to happen. and putting together a fusion center with resources from the fbi, intelligence community an others to go after those americans who have been held hostage overseas. the president today really emphasizing this is all about the families of those people who have been taken hostage. take a listen. >> they've often felt lost in the bureaucracy and how in some cases families feel that they've been threatened for exploring certain options to bring their loved ones home. that's totally unacceptable. >> now mandy, the president did reiterate that the u.s. policy on this is not going to change. the united states has a no-concessions policy. the president said that's important because if hostage takers out there across the world start to see that the united states is paying ransoms, that's going to put more americans traveling overseas in danger. the president said that policy is not going to change. >> thank you very much eamon javers. back to the stock market where netflix hitting all-time
1:11 pm
highs today with a 7 for 1 stock split on the way. one of its biggest investors sold all of his stake. should you buy netflix when it splits? dominic chu has been taking a closer look. >> we all know what the bullish case is for netflix. the stock has been on a tear over the last few years but the last time the stock split it didn't work out all too well in the year following. we'll show you that and some of the valuations coming up after the break here on "power lunch." ♪ i built my business with passion. but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy for my studio. ♪ and that unlimited 2% cash back from spark means thousands
1:12 pm
of dollars each year going back into my business... that's huge for my bottom line. what's in your wallet? top chef. soccer! top chef! disco. the x1 voice remote from xfinity. female announcer: don't miss sleep train's 4th of july sale! save $300 on beautyrest and posturepedic. plus, pay no interest for 36 months
1:13 pm
on tempur-pedic and icomfort. sleep train's 4th of july sale is ending soon! ♪ your ticket to a better night's sleep ♪
1:14 pm
the world's biggest seed company, monsanto saying sales growing 30% in the second quarter but that fourth quarter results should break even. spicemaker mccormick buying stubbs incorporated. a ruling against sysco will prevent the combination of two of the biggest food distributors. . netflix hitting all-time highs today and the company making a 7 for 1 stock split. one of its most high-profile investors, carl icahn, tweeting out today he's sold his remaining stake. with the stock up more than 900% in three years, should you buy the stock after it splits? dominic chu, what are you finding? >> i don't know if you should buy it or not but i will tell you -- >> thanks dom. >> exactly. right? i will tell you though some numbers behind what netflix has done. bullish case is what you just said. this stock has been the momentum of momentum stocks and the
1:15 pm
momentum's been positive. but some of the valuations are why some of the concerns are there. it is worth $41 billion right now. in and of itself that doesn't mean very much now. but when you consider it stradz at 1 trades at 178 times last year's earnings. 304 times forward, and trades at seven times sales. some traders say maybe this thing is due for a pause. if you look at the last time netflix split this is another reason why some traders are a little bit worried. first of all, you got to go back to february of 2004. just around this area right here. you can see the year following over to about here the stock lost about 70% of its value. it went from a $37 stock to an $11, $12 stock during that year span. here's the thing. you can know right now we are talking 30 $11 stocks it's worth $684 right now.
1:16 pm
it's made a huge run. look at this. from an average analyst, analyst standpoint it is already trading above where it is supposed to trade. on average analysts have a target rage that's tradeing six times above that. from a valuation perspective, this is the reason why some traders are saying maybe it is time for a bit of a pause. maybe one of the reasons why carl icahn took a bit of his -- or all of his stake off the table. >> the interesting thing he was telling scotty is apple is where netflix was a couple of years ago. we'll talk more about some of the tweets and comments from mr. carl icahn later on in the show. in the meantime here's a question for you. do you know how much money your spouse makes or even how much your household investments are worth? a surprising new survey on money and marriage we've got some very sound advice for you as well. up next a power pitch re-inventing the rib. >> healthy barbecue is here with
1:17 pm
chicken ribs. >> account founder take the heat? >> to me it is really just a chicken thigh, isn't it? >> the million dollar question. literally literally. how are you going to use the money that you raise? >> stay tuned to find out.
1:18 pm
1:19 pm
we want to call your attention to what's happening with the overall market. as we stand the dow stands down about 124, 125 points near its worst levels today so far. down trip digits 125 points to the downside for the dow so far.
1:20 pm
as for other individual movers shares of fortinet lower after both citigroup and baird analysts downgraded. saying they are attempting to get more collective in security as valuations have extended over the last 18 months. other high-flyers in cyber security, all down moving in sympathy perhaps with this fortinet downgrade. watching those cyber security stocks. take a look at this. a violent raid on a jewelry shop east of liverpool, england, caught on tape. kind of. you can see the figures of the robbers but they're covered head to toe in black. then an internal smoke alarm designed to deter robbers spreads smoke throughout the building. you'll see smoke covering up the video. bandits force a guard to the ground, smashed their way to $300,000 worth of watches before fleeing. there's your smoke. the police now are on the hunt. changing gears now, it is time for "power pitch." this week's entrepreneur wants
1:21 pm
to re-invent the rib but will the panel just eat it up? let's find out. >> hello. i'm alan knuckman. barbecue is a noun to some. it is a delicious slow-cooked goodness all about the process to get the flavor. healthy barbecue is here with chicken ribs. yes, low-fat barbecue. 80% less fat per serving than pork ribs and 70% less calories. a chicken rib is a special cut of skinless chicken with authentic texas dry rub barbecue spices and real hickory wood smoke. my decades-old backyard recipe cuts back the fat but not the flavor. super meaty and juicy, the bone-in chicken rib has a handle for eating this barbecue with ease. it is also fully cooked so it is convenient to prepare and share any time. heat and eat healthy barbecue. chicken ribs are ready for the
1:22 pm
grocery store as a frozen product in the fast growing ready-to-eat meal section or hot in the deli. rain or shine, it's healthy barbecue time. >> welcome to today's "power pitch," everybody. you just heard the pitch now let's meet the panel. nick marsh, firstmark capital, the ceo of chopt creative salad. also chef slander smaulslls. last year's esquire magazine named him the best new chef. tim love knows western cuisine and barbecue. catch him on cnbc's "restaurant strart startup." nick, throw out the first question to alan. >> the hard part is creating that consumer awareness and getting distribution. the science part of the business. can you tell me about little bit about your plans for that? >> i think this has a food service aspect. grocery store is really the focus right now. i think the frozen food section.
1:23 pm
also the ready to eat meal section. even in the deli it is an alternative to getting a healthy piece of chicken and protein any time. >> i find causing it authentic using texas spices and tennessee types of wood doesn't meld to me. i would have used oak. when are you calling it chicken ribs. it is just a chicken thigh, isn't it? >> technically, yes. but it is the process, xwin nation of the combination muchof the cut and process. i'm using hickory because mesquite in texas would be a little bit overwhelming. when you eat this you want to be thinking barbecue. you're not thinking chicken. there is a big difference between barbecued chicken and chicken barbecue the way this is done. >> there are about six pieces in one ever these packets. it will retail for what price? >> about $7.99. >> it is great you're going out no you to raise some money. the million dollar question literally is how are you going to use the money that you raise? >> i've got to do a lot of
1:24 pm
grocery store sampling and also there's inventory and i need some working capital to be able to test this in multiple grocery stores across the country. >> what about sauce? what about a pack of sauce? something that added another dimension for the consumer? >> well the consumer they're very regional as far as sauces go. i didn't want the sauce to be the subject or the focus. i wanted the meat to be the focus. you can dip it in whatever sauce you prefer. it's going to be different in carolina. it's going to be different in texas. it's going to be different in new york city. >> for me you didn't really quite answer the question about distribution because you're pretty fast talker which i like. but what i'm curious of is how you really have a plan to distribute a barbecued product across the entire country where there are a lot of regionalities to it. >> the sell is that we're selling texas barbecue whether you think it is as authentic as i think it is. i spent three years in dallas so i have some experience. >> i just spent my whole life. >> you trump me there. but yes, the challenge is to get the large grocery store chains
1:25 pm
to carry it. this is the starting point because this is something that i created for myself over ten years ago because i love barbecue so much but i wanted to have a low-fat version for my own personal health. >> we all heard what alan had to say. now we need to know if the panel is in or out. nick, you first. >> we do sell about a million pounds of free bird chicken in our salad restaurant so i'm very bullish on chicken. i'm in. >> one in. chef smalls? >> i am concerned about the sauce issue but i'm satisfied with his answer. i'm in. >> two ins. tim, what about you? >> today's world is looking to have a chicken excuse for a lot of things and i think when you look at somebody that can produce barbecue that actually gets frozen is easily reheated i think it is a very positive product. for me i think it needs to be a little bit quicker process. a 30-minute reheat really to me says why not buy the chick thighs and add the seasoning. however if you get the distribution right and move it
1:26 pm
the product to have two or three different profiles i think i'm in. >> 2 1/2. >> that's very good response. what did you think? >> i very much appreciate that. i think it is a unique way and a healthy way to get protein, healthy protein in people's hands. >> thanks to alan nick and tim. that's today's "power pitch." >> i was in on the taste as well. we want to hear from you so get on twitter. let us know if you are in or out using the hashtag power pitch. let's bring up a board to show you what's happening with the markets because we are losing steam here. we're currently sitting at the lows of the day. dow down by 138 points. if we lose another five points we'll be at 18,000 even all over again. do you, america, know how much your spouse or partner makes? do you agree on how to invest? a shocking new survey on money and marriage that you will need
1:27 pm
to hear. plus would you share your car with someone else? like rent your car out to someone else. ford is betting that you will. we'll tell you how coming up. my businesses are definitely my life. my passion. this is what i was placed on the planet for. i'm truly a master of multitasking. yeah yeah. we'll get it done. that momentum is constantly going. that's what i'm here for. having that same process applied to my banking is amazing. chase technology is moving at the pace that the rest of the world is moving, allowing my momentum to kind of keep driving. technology designed for your business. so you can easily master the way you bank.
1:28 pm
1:29 pm
1:30 pm
hello, everyone. i'm sue herera. here's your cnbc news update this hour. the french president says he spoke with president obama about revelations of u.s. eavesdropping on french leaders. the president told him that the u.s. is not targeting his communications and repeated promises to stop spying tactics considered unacceptable between allies. defense secretary ash carter arrived in brussels for two days of talks with nato defense ministers. they are expected to take some new steps to increase the strength and capability of the nato response force which will amount to 40,000 troops which is more than double its previous size. a turkish man has been extradited to the u.s. to face charges that he organized three cyber attacks that resulted in $55 million worth of losses to the global financial system. prosecutors called him the
1:31 pm
mastermind behind the hacking organization. if you're a "seinfeld" fan, hulu has recreated seinfeld's apartment from the hit 1990s sitcom to celebrate its acquisition of the show which debuts on the online video streaming service today. the apartment features show memorabilia, a gallery, complete with props and scripts. not that there's anything wrong with that. and that's the news update. back to you guys. >> thank you very much. check the price of gold if we can. the closing trade for gold is down $3.60 per ounce. we've got silver copper palladium and platinum. well, three are up one is down. palladium is the one that's down. to the bond market now, rick santelli is tracking the action at the cme. track the action. >> i'll track the action. when the auction buttoned up for the 5-years, the dow was down about 1.10. now it is down 1.50%.
1:32 pm
the intraday 5-year chart shows at 1:00 eastern we had volatility to the up side in yield. the auction was a bit below average. a year to date chart of 5s, what should jump out at you is how many important tops are around this 1.70 to 1.80 area. if you open the chart up for a full two years going back to the summer of 2013, you can see that we are at a very significant level. we always talk about the yield curve and the long end. but when you look at the same 2-year chart at 30s, it still has room to run to the up side. dollar index moving sideways through most of this. >> thank you for that rick santelli. the dow is now down by about 145 points on amongst other things concerns about the ongoing greek debt talks. there's also throw into the mix, billionaire investor carl icahn who's sounding the alarm about the market on "fast money halftime report."
1:33 pm
let's have a listen. >> i'm very concerned about the market and i think the market is overheated especially the high yield market. it is sort of a sad commentary because i think the public is walking into a trap again as they did in '07. >> joining us now, jason milling, director of portfolio manager at rockland trust investment group, and chief burtleson, chief investment officer at global financial capital. chris, do you agree with some of the concerns that mr. icahn sounded? >> i certainly do on the equity side. i think we need to flush out the weak hands and the bubble boys and we should get it during earnings. but on the high yield side i don't agree with him. i don't think we have a big maturity rollover for at least two years and i think that high yield with the higher income is a much better bet than u.s. treasuries, the 10 or the 30 which i think is on the eve of destruction. >> eve of destruction? my goodness, me, you can't just
1:34 pm
make a statement like that and not explain, chris. >> let's explain it. you're already down 11% to 14% depending upon exactly which one you own. if you invested at the end of january. that's really tough. that's going to take people two or three years to make back that amount of money in the income the bond has. i think the same thing is true when you look at utilities and reits and other interest sensitive areas. when you say destruction, i mean going back to normal levels. for that for at least in the 10-year we might get up to 2.8% or thereabouts but i don't think we're going to 4% or 5%. >> we could talk about interest rate sensitive sectors. yesterday the utility etfs hit around their lowest for the year. jason, what did you think about not just the comments that bl icahn made but some of the tweets and let me read of one in particular. if more respected investors had warned about the market in '07 we might have avoided the crisis in '08. is he likening us to an
1:35 pm
impending crash situation? >> boy it certainly sounds or reads that way, doesn't it? >> yeah. >> i actually agree with his statement on the high yields. i'm going to take the opposite side of what chris presented. i think -- it's really hard to justify the spreads in high yield today relative to the risks associated in that asset class. that said high yield does have a place in a portfolio. however, if you're an investor that has gravitated towards yield and now you got 20%, 25% in that asset class, i think it is time to re-evaluate. as far as the stock market goes hard to know what he's talking about but let's assume it is the u.s. market. i think there is a really strong stealthy demand recovery. in fact, if you look at demand it is growing for the first time in more than 15 years faster than supply. and things like real wages, job openings. the auto sales. all these suggest that stronger consumer demand can actually
1:36 pm
transition the u.s. economy into a demand-led economy which should ultimately be good for stocks. >> we're currently sitting around the lows of the day. i just put up some of the boards that -- of the stocks that you like here jason, by the way. you like the banks. a lot of them have already been riding this expectation of higher rates and have done very well including m&t bank huntington banc and wintrust. i know you take a longer term view, but chris, for example, right now what do you see is the biggest concern? greece? concerns about liquidity? is it something else that's giving you the markets concern? >> i think greece is the biggest short-term one. like picking leaves off a daisy, she loves me she loves me not. i think europe in a buy in a couple ever kuxweeks after the dust settles. >> would you agree, gentleman i
1:37 pm
son? jason? >> i agree greece is a challenge certainly not in terms of the magnitude that the u.s. economy struggled through in past years with government shutdowns and fiscal cliffs and qe et cetera. i think europe gets through that and it is a good place to look at for a portion of your portfolio? >> thank you, guys. go to to learn lie chris thinks the best strategy is to learn to love what you hate. we are at the lows of the day, brian, currently down by 144 points on the dow. ford shares are in the green today. there is a big analyst call out on the company which we'll hit in the next hour. but that is not the news today. the news today is that the automaker is doing something that no other major automaker has ever done before. phil lebeau is live in detroit. >> reporter: hi, brian. they're getting into the car sharing business. not with a big splash.
1:38 pm
at least kind of just sticking their toe into it. but it is a pilot program that if successful we could see pushed around the country and around the world. let's explain the car share program. it will be in six u.s. cities. three in the bay area as welling a portland chicago, and d.c. then it is also one in the uk. ford motor credit customers, those who have bought their vehicle through ford financed it through ford, they will be able to participate in this. they'll use the get-around app. get yarnd being a start-up company out of san francisco which will run the app for those who want to do the car share program and the owners will decide the rate that will be charged. why is ford doing this? take a look at the growth in popularity for car share programs. zipcar being a perfect example. 4.9 million car share members worldwide. not zipcar alone, other programs around the world. 26 million car share members by 2020. the ceo mark field says this is an example of the company trying
1:39 pm
to reach that growing audience. >> there was no drama with this whatsoever. it is all about listening to the customers. what we're seeing is customers particularly in urban areas want access versus ownership. >> reporter: take a look at shares of ford and yes, the stock is in the green today but in the last year it's down 8%. upgraded today by goldman sachs, brian. they say look at ford in the second half of this year when you'll see greater production of the new f-series because both plants will be up and producing the new pick-up truck and they expect stronger sales in the second half for ford. >> phil, see you in the next hour with cool new car releases from ford's cross-town rye rival. are you cheating on your spouse with money? do you know how much your spouse or partner even makes? it is all part of a new money and marriage survey and you may not believe the results. as we head out, stocks at session lows. another triple-digit drop in the dow. goldman sachs the biggest drag on that index.
1:40 pm
and the, the only stock in the dow, that's up.
1:41 pm
[ male announcer ] legalzoom has helped start over 1 million businesses. if you have a business idea, we have a personalized legal solution that's right for you. with easy step-by-step guidance, we're here
1:42 pm
to help you turn your dream into a reality. start your business today with legalzoom. welcome back to "power lunch." let's take a look at some of the stocks that are dragging weighing on the dow today. goldman sachs shaving about 30 points off the benchmark index. deutsche bank cutting its rating on that stock as well as shares of citigroup. united health care shares shaving 20 points off the dow today even though rbc began coverage on the stock with an outperform rating. apple is by the way, the only positive stock so far today in the dow. interesting moves here in the blue chip index. back over to you. we are one step closer to crowning america's top states for business. cnbc's ninth annual study ranking all 50 states. this year, we are putting special emphasis on the labor force as some businesses struggle to find qualified workers. let's get now to special
1:43 pm
correspondent scott cohn who is live once again in the mystery state. scott? >> brian, we started "top states" nine years ago in 2007. at the tail end of the real estate bubble. we followed state competitiveness through the great recession, the slow recovery and as a result there have been a lot of changes over the years but also some constants. with that in mind let's look now at state number three. utah. the beehive state. buzzes in at number three this year with 1,556 points. utah was also number three last year. utah's best category, its economy. the bast overall in the nation according to our study with strong job growth among the most solid state finances in the nation and a thriving consumer economy. unemployment is among the lowest in the country. utah's worst category -- education. a perennial weak spot here with large class sizes and low spending. but utah showed strong improvement in the category over
1:44 pm
last year. utah's individual income tax is 5%. the corporate franchise tax is 5%. the state sales tax is 4.7%. with local taxes pushing the total as high as 8.35%. utah's largest private employer is intermountain health care a non-profit system of hospitals and clinics. the largest industry is finance. so chalk up another one for the west as our countdown rolls on. we've been giving you hints actually starting yesterday around this time. and a lot of really interesting, really creative responses. some of you are working kind of hard at this so we're going to let you rest a little bit this hour. but i want to let you know that some time within the next couple of hours i will give a bonus hint on twitter. follow me @scottcohntv. we will have a bonus twitter hint coming up and another hint coming up on the "closing bell"
1:45 pm
along with the runner-up, then the big unveiling of where i am the top state for business in the 4:00 hour of the "closing bell" today. >> just to be clear, your twitter handle is @scottcohntv. >> that is me. >> somebody named mascott cohn is getting a lot of hints. stocks are the top story anddeteriorating, the dow, the s&p and nasdaq. the dow on its lows of the day. fidelity investments out with a new report on marriage and money. some of these numbers are shocking. for example, when couples were asked what salary their spouse made nearly 43% ever them got it wrong. 10% of those were off by $25,000 or more. fidelity's executive vice president of retirement and investing strategies john sweeney joins us, as well as the
1:46 pm
money coach, lynette cox. lynette, were you shocked by these numbers and is there one number in particular that made your eyes pop out? >> most of the numbers didn't actually surprise me but, yes, i was very shocked by the fact that 43% of the people didn't even know how much their spouse earns. i think that's crazy! because you figure if you're going to plan and build a life together financially you have to know the very basics which is how much cash do you both have coming in the door. >> just to play devil's advocate here, what if for example your spouse has their own business, they might be a contractor. it may not be a set monthly salary so therefore it might be quite difficult for you to know. >> i think that's exactly right. you have people in a project-based economy. their income varies from year to year so it is not as if they're withholding information. it is difficult for them to predict what they themselves might make each year. >> i think that there is a certain amount of withholding of information going on though. if you look at a number of surveys, we talk a lot about americans having a lot of financial infidelity and not disclosing certain things.
1:47 pm
i know for a lot of women for example who are increasingly the primary bread winners in their families, maybe they don't want to upsit theet the apple cart and maybe step on a guy's ego and they're holding back because they have that old-school mentality from mom or grandmom which is keep a little money on the side just in case. >> just in case you might break up? >> maybe. but there are reasons people maybe aren't being as forthcoming as they are about the income. >> one thing that bothers me is people don't have any concept of what kind of health care costs they're going to be up for in retirement which could completely blow your retirement. >> health care is one of those essential expenses like food and shelter. what's difficult to anticipate is when you retire say at 65 you may not have a chronic condition. a chronic condition may develop ten years into retirement and all of a sudden those medical expenses become essential expenses so they are difficult to anticipate when you plan out what you might need for retirement. >> thank you very much to both of you.
1:48 pm
still ahead, a house being hat trick. three big stories in housing right now and how you can make money on some of them. as we head out, the biggest winners in the s&p 500, lennar sysco and darden. monsanto monsanto, the seed company, is down 5.7%. automotive innovation starts... right here. with a control pad that can read your handwriting, a wide-screen multimedia center, and a head-up display for enhanced driver focus. all inside a redesigned cabin of unrivaled style and comfort. the 2015 c-class. at the very touchpoint of performance and innovation.
1:49 pm
1:50 pm
1:51 pm
hello. i'm sue herera. we're following a developing story, which is the negotiations to try and reach a bailout deal for greece. there is some pressure in the market today. as you can see, down 145 points on the dow jones industrial average. some of that is being linked to some relatively negative comments coming out from the many finance ministers gathered now to try to work out the situation. for instance, the german finance minister says my feeling is not much has changed since monday. austria saying that the greek talks look less optimistic than monday. the finnish prime minister saying he would be very positively surprised if they get a greek deal tonight. there's political will for greece, but greece has to respect the eurozone results. that's from the spanish finance
1:52 pm
minister. in terms of the eu their minister says it is likely to be a long night of euro group discussions on greece. so basically, right now, it doesn't look all that positive. we're watching it for you and we'll watch it for you throughout the day. let's go over to dom now. let's pick up where you left off. one of the negatives here as hand the transportation stocks. chart watchers out there, the dow jones transportation average is back in correction territory sliding about 2% today, now back down to more than 10% off its record intraday high from last november. all 20 members of the index are lower on the day, led by truckers like jb hunt. also rails like kansas city southern and csx as well. brian, back over to you. cnbc profiled some of the country's most dynamic businesses at the iconic conference in los angeles this week. let's get back to julia boorstin who is in los angeles.
1:53 pm
>> reporter: that's right. advice was shared to entrepreneurs in the key to unlikely successes, including maker studios which the two los angeles based companies say they see huge value being based outside silicon valley. >> even in a communication era, some of the greatest companies through history have been built in washington, d.c. they've been built in denver, they they've been built all over the world. so we think that the next 20 to 25 years is going to be the rise of other cities. >> cautioning entrepreneurs only to start companies where they have particular expertise and only if they're so passionate about it they can't imagine not starting it. they also cautioned that most companies should not raise venture capital. we'll have more from the last stop on the 2015 tour on november 11th in washington, d.c. early bird tickets are available now at
1:54 pm
>> nk that youthank you, julia. you've got the nasdaq 100, up here you've got apple which is currently the biggest winner up by 1.2%. we'll leave you with that look as we go to break. verizon say neversettle. t-mobile agrees. never settle for verizon's overpriced gimmicks. try the un-carrier risk-free for 14 days you'll love it, or we'll pay for you to go back. ♪ mamas, don't let your babies grow up to be cowboys ♪ ♪ don't let'em pick guitars and drive them old trucks ♪
1:55 pm
boys? ♪ mamas, don't let your babies...♪ stop less. go more. the passat tdi clean diesel with up to 814 hwy miles per tank. hurry in and you can get 0% apr plus a one-thousand dollar volkswagen credit bonus on 2015 passat tdi clean diesel models.
1:56 pm
♪ every auto insurance policy has a number. but not every insurance company understands the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and see why 92% of our members plan to stay for life.
1:57 pm
the markets been selling off. we're currently setting around session lows. jim yoururio one reason being given for the sell-off is that things aren't going so well in greece. are we really surprised about that? >> it should be a drinking game mandy. every time we mention greece in a trading range we should have to take a shot. but it is the real story. we got to the top of the trading range. the market was trying to figure out a reason to break out of it. then realized we'd kind of priced in a greek resolution that wasn't exactly there yet. do i think it is going to happen? yes. do i think it will happen before the june 30th deadline? not a chance. these people if they're harder politicians like the drama as much as anybody does. i think it is a hiccup. think at the end of the day our
1:58 pm
market is going to do fine. but it is in this range, 2070 on the downside. that's perfectly reachable in my estimation. >> how do we get out from under all these headlines? how do we try to latch on to something other than oscillating from good news on greece to bad news on greece? >> what you have to do is you kind of have to play both sides. all right? i think if you look forward you have to maybe buy some calls, some $1.50 bank of greece calls. go out a half a year or year-and-a-half so you're protected both ways and you got to watch your technicals. today the trade is very technical. we really need to stay above 2,106 on the s&p. >> jimmy, what kind of levels are you looking at? >> i think if we took out two days' ago's high so i'm looking at 2,070 on the downside of the s&p, that's a buyer there.
1:59 pm
i was long volatility sold out of some volatility today. i think i'd rather be long volatility. the 2,070 on the downside is where i plan on buying it. >> what in particular do you think can outperform in this environment? >> all ten sectors a few minutes ago went to the red on this thing. i've been a health care guy for a little while. i know it is a little rich compared to the other sectors. providers are still strong. there's a steady revenue stream. >> got it. thank you very much jim and steven. that's it for the first hour. bine, i know you are all over the second hour so i'll hand it over to you. we do appreciate it. we are coming up on 2:00 on wall street, 9:00 p.m. athens greece. "power lunch" rolling on to its second hour with the dow down triple digits. session lows transports the big loser. only two names are up apple and
2:00 pm
caterpillar. bob pisani is down on the floor of the exchange. >> show the s&p 500 because i think there's two factors moving things. one, we had obviously some of the drama about greece and the continuing uncertainty. i'd say that's maybe 20%, 30%, possibly 40% of it. but when carl icahn came on earlier this morning and said the market was overvalued, then spoke for it extensively on halftime report we just started drifting lower. i attribute part of this to carl icahn. another important factor is the transports. these have moved often when markets move down it is the transports that get hit first. notable moves down across the board. all 20 of them are down. even airline stocks are fractionally to the downside. even unite dd parcel service. this sector is taking profits right across the board. high-beta etf -- hack cyber security biotech etfs, these
2:01 pm
tend to move a little bit more when the market gets a little bit more volatile. they're moving as well. we're going to be talking about banks hitting new highs. we talked about this yesterday. i think it is very important that deutsche bank courageously came out and downgraded goldman sachs and citigroup saying we've had a great run on these, time to do something else. we'll be talking about this in the next hour about whether or not banks are overvalued right now. one bright spot today is the home builders. lennar just a fantastic report. they had numbers, sales much stronger than expected. prices up 8%. these stocks are approaching new highs and we have a bright future at least for the moment in the home building. >> on the back of positive data we got on new home sales and existing home sales earlier in the week. >> we are really expecting big numbers in the second half. home builders expect much improved earnings report. >> this is the first loss in three sessions. in terms of the banks taking profits, we're coming off a pretty strong run. >> the financials have been the
2:02 pm
great mover. i've done this story for weeks on end. they just keep moving up incrementally every day on hopes the economy is going to be improving. >> for now, brian, send it over to you from the floor over to headquarters. we are going to continue to keep an eye on this market slide but for right now let us talk technology. three big stories today. first, the debate over the outlook for yahoo! as it meets with shareholders. next netflix announcing a huge stock split. third, can anything stop facebook? those shares hitting another all-time high earlier today. let us dig in on our "tech trifecta." yahoo! stock down nearly 20% this year. one core analyst, josh lipton give us what happened at the shareholders. >> marissa myer reminded shareholders what is going right at the company. new growth areas -- mobile,
2:03 pm
video, social and native advertising generated $1.1 billion in revenue last year. monthly active users on mobile up 20% year over year. she also said tumblr was in her words an excellent investment and the goal is still to do $100 million in revenue from that platform this year. as for alibaba, she said the plan is still to compete the spinoff by q4. yahoo! still faces real challenges. in its last report quarter yahoo! said revenue from both display and search ads fell. let us bring in now that analyst that we just referenced ivan feinsef. this chart comes out of the research firm statista. how severe is yahoo!'s core business deteriorating? >> the problem is yahoo! really lax exceptionalism.
2:04 pm
they have a great brand name but they've kind of faded. in the beginning everybody had high hopes for marissa myer to expand in key areas but they haven't really capitalized or dominated any of those key areas. they are continuing to lose that to search to google and bing and to the social media platform to facebook. >> is the real problem with investing in yahoo! maybe lack of just understanding of the company, but more to the point of alibaba. a massive stake. i know that's being wound down but alibaba creates a sort of benefit and a drawback to the company as an equity. does it not? >> the whole value for the company is really in the cash from the sale of alibaba in the ipo and the existing position they own. there's really very little in their core business that's being valued because there's, in theory, very little organic growth in their core business or exceptionalism. >> i get that. others have made that point as well. but even though the core business may be deteriorating,
2:05 pm
you are still talking about hundreds of millions of eyeballs per year. >> the wall street wants to see positive growth. wall street -- it's overall -- unless a company is moving forward, especially in tech they're going to be left behind. you got to move forward. >> ivan feinseth a real pleasure. thank you very much. let's move on brian, to netflix announcing a big 7 for 1 stock split. the stock hitting an all-time high but then pulling back as investor carl icahn announced he sold the last of his shares. julia boorstin has more. >> reporter: netflix will have to keep outperforming in the same three air that have that driven its stock to grow 900% in three years. one, ongoing subscriber growth. despite new rivals including hbo now and new showtime's new direct to consumer app. two, successful expansion overseas as netflix pushes to be available in being in 200
2:06 pm
countries by 2016. >> thank you very much julia. can netflix pull it off? let's bring in an analyst. will power has an outperform on the stock, $610 price target. to julia's question can they keep up this momentous run, all the way to your price target and perhaps even beyond? >> well right. look, i think our price target will probably have to be adjusted here probably soon but for us this is increasingly for us been a stock that -- really a service that consumers have to have. that's really the key driver. you look the a the breadth and depth of content they've rolled out, real even in the last couple of months. these are shows that consumers want to watch and that will continue to drive more viewership to their service and we think the opportunity longer term. >> i guess the worry here today, carl icahn making a big
2:07 pm
statement, certainly the stock has had a run since he started buying in 2012. now that he's out you have to wonder has the easy money been made in this stock? are we going to see the kind of gains that we have seen 100% so far year to date or is it going to be more gradual and slow? >> well i suspect it is going to be difficult to replicate the gains we've seen year to date. it's been a juggernaut. it was one of our top picks coming in to the year and has obviously performed exceedingly well. it is hard to fault carl icahn or anyone who bought the stock for under $100 to taking some profits here. let me give you a little bit of perspective. their subscriber base is almost $60 million. the u.s. is less than one-fifth of the global broadband opportunity. the international runway that's still ahead of them we think there's still significant growth and ultimately that's going to be the key driver of the stock. >> with a bullish take. will power at rw baird.
2:08 pm
we round out the tech trifecta, facebook absolutely on fire. up 8% in the past week tradesing at an all-time face. james, jim cramer hit facebook hard on "mad money" last night. also talking about the charts. said it was just a spectacular looking chart. facebook seems to be hitting on all cylinders right now. is there anything in your mind that is going to slow this company down? >> hi brian. it is at an all-time high but we think it is deservedly so. we think this is the time investors come around with that incremental promise for appreciation that there's still opportunity in the first pitch of the first inning. that includes instagram, messenger, what's app, oculus. we think these vast opportunities which are virtually reflected in the models at near zero today as they get baked in. we'll continue to drive up side. when you think about what they're doing their recent
2:09 pm
efforts are putting them in even better contention against their competition against the likes of google and now most recently yesterday against twitter. >> we look at the valuation of twitter. $30 billion, whatever it is at. i know it's come way down. how much do you model for instagram, which by the way is looking like the smartest deal of all time. the instagram valuation has got to be adding a massive amount of market cap to facebook. >> absolutely. this year we had $1 billion of contribution from instagram going up to $3 billion by 2017. admittedly those numbers could very well prove conservative because the efforts they're doing moving more into real time stealing those brand dollars away from google and twitter we think can create a vast opportunity that's not reflected in the model today. >> your price target of facebook is $95. >> currently. correct. obviously we evaluate the news that comes out and we will
2:10 pm
re-evaluate at that time. >> it is only six and change away, james. >> we're getting there. we'll see what they have to say on how quickly they turn on the levers. everything we're hearing is quite promising. >> thank you very much james. so folks, there is a look at three big stock stories today but let us expand back out to the broader market. it is down. the dow down 142 points right now. about .8%. transports are taking it the as a group, down about 2%. all of this as the clock continues to tick on a greek debt deal. let us get back to our own steve sedgwick live in athens greece with the latest on what's literally a situation that develops and changes by the hour. >> reporter: thanks very much. it is changing in athens here but it is also changing in brussels. alexis tsipras went to brussels they hope to clinch a deal. the brussels press corps are
2:11 pm
getting a bit dispirited that there will not be a deal indeed. the finnish finance minister had the following to say about hopes for a deal tonight. >> i would be very positively surprised if we would get a deal tonight. there's been a lot of back-and-forth between the technical level and the political level. we have not seen a concrete proposal yet and we have to deal with it very carefully based on our parliamentary mandates. >> reporter: herein lies the issue. finland used to be one of the hard. -liners. it was a hard-liner along with germany then their economy hit the rocks so they aren't demanding quite as much austerity. the fins and the germ rns are going to get it through their parliament if -- if -- it is agreed in the next 24 hours. but if not it could lead to all kinds of problems next week including a technical default on that imf loan. that's the next hurdle. from greece to the federal
2:12 pm
reserve. investors continuing to debate when the fed will hike interest rates. at least one economist thinks that they may not hike in september. if they don't, it may not happen at all this year. that economist, the chief u.s. economist with deutsche bank also a cnbc contributor, joe, i'm not going to ask you to comment on the equity markets because that's not what you do. we keep talking about greece. greece. greece. meantime we had a gdp contraction. federal reserve is sticking out there. are american investors -- or american media maybe not focused enough on what is happening in the u.s. right now? >> they are, brian. i think they are focused but this fed has been very dovish. i actually still think the fed will raise rates this year but my confidence is waving in light of recent fed commentary and in light of some of the data you mentioned. maybe the fed will go less this year. earnings looking okay. there's not really that much to do so the markets are very complacent and we see bond investors, yields they are
2:13 pm
still extraordinarily low. i think the equity market still has a lot further to run but the bond market unless the u.s. economy really tanks or something really bad happens in europe, it seems to me that we probably have seen the low in yields in this cycle. >> generally in the history of the stock market when you're looking over here something tends to happen from over there. we had carl icahn on talking to the risk to high yield, i get all these analyst notes every morning, more and more continue to talk about this lack of liquidity in the market. is there sort of a risk under the surface here inside either liquidity or something that may happen to bonds that you are concerned about? >> yes, absolutely. so let's go back and look at the '94 hiking cycle. equity market fell 9% between neb and february and april that year. >> it did surge 30% the following year. >> you're thinking 2000. no. in yv 9'94. in '93 the market was up a
2:14 pm
modest amount but it fell 9% in '94. we fell 6 prgs the six weeks before they hiked in june of '99. we fell 6% two times before they started hiking in june of '04. then we fell 6% during the taper tantrum. yes. one would think that when the fed actually begins to raise rates the equity markets and broader markets will see turbulence. the point you mention on liquidity is very good because as you know dealer inventories are very light, we aren't making markets as we used to. a lot of that is regulatory and capital constraints that we have so one could envision a scenario where if the fed actually did move investors selling liquid assets, s&ps or treasuries to fund redemptions elsewhere. so yeah these are things we have to worry about. right now the market is thinking the fed isn't going as intended. the probability is well below 50-50. >> joe, we do appreciate it. important points. i want to hit the headlines.
2:15 pm
out of greece -- dom, to you in a second. the greeks saying they cannot agree to proposals but talks do continue. can't agree to proposals but talks continue. one wonders then what they're talking about. busy day on "power lunch." let's -- dom, i think you get my point. >> i do. i would just say here that it is probably no surprise at all. we all knew this was going to take a long time and we know these greek headlines are going to keep on coming and coming and coming. but again, no progress yet on those talks. we also want to take our eyes from the macro market to the micromarket here in the united states. nasdaq biotech i about. b -- ibb etf. among the biggest losers in the sector -- aelectionion vertex biogen. industry groups also feeling the pain in today's sell-off. apparently today good things
2:16 pm
come in threes. it is, after all, the magic number. up next a us whoing hat trick. the three big stories in housing right now all over the market slide. here are all 500 stocks on the s&p 500. back right after this. here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third
2:17 pm
tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for all the confidence you need. td ameritrade. you got this.
2:18 pm
2:19 pm
we now present for your consideration three big housing stories. diana olick is with us. let us start with lennar a gigantic earnings beat. looking through the release, hard to find a negative here. >> reporter: you're right, brian. lennar had earnings of 79 cents a share versus 61 cents a year ago. new orders up 18% and the value of those orders up 28%. that is what is most interesting to me. the average price of a lennar home sold in q2 was the highest on record for the company at $348,000. lennar's ceo stewart miller said on the analyst call this morning that lennar is highly focused on its multi-family rental developments, like this. this isn't lennar but one just like it. they've got $6 billion worth in the pipeline. >> the ceo of lennar will do an exclusive interview on the closingclose "closing bell" in the next hour. a new report showing that rent prices are starting to
2:20 pm
pinch the middle class. tell us more. >> reporter: rental demand will soar to historic highs in this decade. surprisingly it will not all be driven by millennials. that's from harvard's joint center for hoursing. saying so far households aged 45 to 64 have accounted for about twice the share of renter growth as households under the age of 35. as we talk about higher rents, it's the middle age, middle class also getting squeezed and, in addition households in the top half of the income distribution, although generally more likely to own, they actually contributed 43% of the growth in renters. >> topic three now, mortgage applications. they were up last week diana. we know interest rates have also come up. what's your take on the weekly numbers? >> reporter: well with be they moved a little bit up but not too much. that even as interest rates pulled back ever so slightly. total mortgage application volume up 1.6% week to week. re-fis rose 2% but that's off a really super-low volume already.
2:21 pm
applications to buy a home rose 1%. this is the average contract interest rate for 30-year fixed mortgages with conforming loan balances fell to 4.19% from 4.22%. that's with 20% down payment. all that said for last week mortgage gurus are telling me today rates are climbing back up a little bit. brian? >> diana, three big stories in housing. thank you. reminder stocks overall hitting in you lows on the session. here to make sense of all of the housing data what it means for the economy, mark we wanted to bring you on to talk about housing but i got to ask you about these overall markets. in just a bit when you gather in that big conference room at pimco, is everybody talking about greece or something else? >> well brian, everyone's talking about greece but really the big picture here is that you're going to have monetary policy divergence. housing and the consumer is doing very well in the u.s. whereas europe growth is weaker. we actually continue to see housing as a bright spot.
2:22 pm
we've been overweight for three years and we continue to like it. >> is it a good investable opportunity though? if so mark are you just talking about buying a home and watching the value go up? how are you guys at pimco taking advantage of your thesis? >> we basically have been overweight non-agency mortgages for the past three to four years. we're basically earning roughly 5% 6% on these securities. we're also overweight home builders building materials, companies, title insurance companies, and lumber companies. we're very much overweight housing themes as well as the consumer. we see the labor market continuing to improve. we've added three million private sector jobs. most importantly though brian, is the 25 to 35-year-old cohort that first-time buyer, is back. i have basically 845,000 jobs have been created in that first-time buyer cohort over the last year. that's the strongest time in 15
2:23 pm
years. first time buyers are back and that's driving the housing demand right now. >> i'm going to switch off the suggested topic because of what's going on. carl icahn today expressing concern about high yield. are you guys at pimco -- you know a little thing or two about bonds -- are you worried about the high-yield market right now? >> well we have a lot of cash in our portfolios right now. we're running relatively conservative. we are avoiding some of the lower quality high-yield. again we're favoring non-agency mortgages which we think is more of a pure play on housing. within the high-yield market we're favoring those rising stars, those companies who are fundamentally improving. so, yes, you want to be conservative in the credit markets today but there's significant ways to add value through active management which pimco has been doing for decades. >> just quickly, carl icahn didn't say it but he sort of hinted like there my be a crisis. he said if more smart people came out in '07, maybe '08 wouldn't have happened. there was sort of a hint of maybe bad things on the horizon. do you agree with that? >> not yet, no. i mean we warned about the housing crisis back in '06 and
2:24 pm
'07 and we've gone long and -- since 2012. we think federal reserve policy is going to normalize rates but they're going to do it very gradually. the reality is this economic expansion will likely continue for several more years so with that as a backdrop we don't see fundamentally the high-yield market at risk right now. >> mark keisel thanks for that. outside of all this though folks, can you believe it is just two hours from now when we will learn what state takes the title for the best state in business for all the land? up next your final hint on where it might be. by the way, we have no idea. we keep guessing just like anybody else. scott cohn and his team are literally marked down. as we inch closer to the close, the dow is now down .9%. back after this. the e-class has 11 intelligent driver-assist systems. it recognizes pedestrians
2:25 pm
and alerts you. warns you about incoming cross-traffic. cameras and radar detect dangers you don't. and it can even stop by itself. so in this crash test, one thing's missing: a crash. the 2016 e-class from mercedes-benz.
2:26 pm
2:27 pm
welcome back to "power lunch." stocks at session lows. the action in etfs that track the major indices also lower. the dow etf down only a full percent. the s&p 500 lower as one. the nasdaq qqq down .5% really
2:28 pm
taking a beating right now, the russell small cap index etf, down almost 1%. russell 2000 index of small caps yesterday reached a record high. let's go inside the s&p 500, show you where the pressure is. it comes to sectors, materials unpressure the most. all ten sectors are lower. materials getting hit the worst. health care which has been the hottest of the past year also at the bottom of the list. industrials, consumer discretionary and energy going from energy which is rounding out the bottom five let's go to the closing trades of oil. about to close, jackie deangelis live for us at the nymex. >> reporter: one minute we're positive, one minute we're negative. choppy trade in oil today. this is really a tale of two data points. the market is confused. we've got that story when "power lunch" comes back.
2:29 pm
2:30 pm
2:31 pm
i'm sue herera. here's your cnbc news update. boston marathon bomber dzhokhar
2:32 pm
tsarnaev addressing the court at his death sentence hearing. he apologized admitting there is no doubt he and his brother were guilty. he will be sent to indiana for prison and execution pending an automatic appeal. president obama admitting the u.s. government had let down the families of americans held hostage by terrorists and outline new policies that could make it easier for them to pay ransom and not worry about criminal prosecution. >> these families have already suffered enough and they should never feel ignored. they were victimized by their own government. the last thing we should ever do is to add to family's pain with threats like that. an american toyota executive arrested in japan on drug charges says the drugs were painkillers for her knees. julie hamp was arrested for receiving 50 oxycodone tablets in the mail but denied she imported illegal drugs. former president george w.
2:33 pm
bush unveiling the veteran deployment transition road map at the summit devoted to 9/11 victims and careers in washington, d.c. it helps military veterans to find civilian jobs on leaving the service. that's your cnbc news update this hour. it has been an up and down day for oil. mostly down as we head into the close. jackdy deangelis downtown at the nymex. >> that's right we settled lower today by 75 cents. $60.27 is where wti finished off. we were seesawing all day because of the data from the eia. the inventory number was negative 4.9 million barrels last week but production back up over 9.6 million barrels a day. the market didn't know how to read this and in the end it went with that supply/demand dekwags that continues not to work out. still that seesaw continuing around the $60 level. that's the 2 it 00-day moving average for wti. the intraday high today, $61.57. we haven't seen that since june
2:34 pm
2nd. let's check on the 10-year bond yield. late night talks obviously over in brussels over greece not going too well giving investors concerns. we want to check the euro versus the dollar which continues to sort of defy the anxiety over greece. the euro is actually stronger right now against the u.s. dollar. as many say, it is about central banks when it comes to currencies, not really about greece. >> let me pick your brain for a second -- we got "street talk." the euro would be stronger if greece goes away it takes out probably the weakest member in the eurozone -- wouldn't that lift it -- >> long term. short term there's all sorts of questions about the credibility of the currency and spillovers which can hurt the banking system and the economies and that would be pretty painful. >> it is time now for "street talk." a bunch of great analyst calls for you today. a two-part call.
2:35 pm
goldman sachs downgrading general motors, upgrading ford. on gm the firm says it sees greater vulnerability to a weakening china. gm had been on its buy list. ford upgraded by goldman because of accelerated earnings momentum and "strong product launch cadence in the right segments," whatever that means. they have a $19 target which implies upside. >> maybe it means the new product cycle? another call from goldman sachs, swapping terayne for applied materials. supplied materials they say added to the conviction buy list based on the 3-d manned product and the company's focus on its core business. >> 24 analysts cover applied materials. the average target price is $23.86. overall not that much optimism above the current price, but to your point, they're optimistic. up next mccormick.
2:36 pm
the spice is nice. sorry. bernstein upgrade inging, going to 9 $93, from $81. this stock was about $15 ten years ago. today mccormick buying the barbecue saucemaker stubbs. >> that spice is spicy and sexy. next up a pair of calls from from. take ea makes madden, battlefield and "star wars." take two behind grand theft auto. >> a bullish and interesting call. my only question for the analysts, is it too late?
2:37 pm
ea is the second-best organic performer in the nasdaq 100 over the 12-month period only behind monster beverage. finally, the last stock always a smaller cap under the radar name today. stn ticker. stantec. probably the first edmondton, canada based company we've ever talked about. water infrastructure for small buildings. upgraded to a buy. d.a. davidson likes the company. about 20% more upside on stn. it's already about a big quarter. 10 of the 14 analysts who cover stantec have a buy rating on the stock. >> i looked it up. it is dual listed in toronto and of course here on the new york stock exchange. time for ""trading nation."" traders trade better together. let's look at google. jonathan karinsky and
2:38 pm
jonathan, you put out a really interesting technical note an google. >> we think google's set to break out to the up side here well above $600 which would target the old highs around $615. kind of similar to what amazon did earlier this year breaking out from a multi-year consolidation. long term you can see. stock almost doubled in two years from 2012 to mmxiv2014. it's had time to consolidate. we think it is set to break out to the up side. one thing that gives us conviction is looking at the volume profile. looking at some on-balance volume. it is a cumulative measure that tells us if buyers or sellers are more active. it hit a new high yesterday. despite the fact that the stock hasn't gone anywhere we can see buyers are getting more aggressive. to us that suggests we're set to move to the up side in the actual price. >> erin gibbs over at sthere, are
2:39 pm
you fundamentally giving us a bullish view from a fundamental perspective? >> yeah. we're actually even more bullish. wall street consensus target price has the price at $643 right now, so even higher. when you look at the fundamentals, we're looking at double-digit gains both top and bottom line over the next three years. from a valuation perspective, even though it is tradesing at $550 it actually looks fairly reasonable. right now it is trading a 19 times forward earnings that's at its three-year average but below it's one-year average so it looks like a good entry point to get in here and easily you could see some significant up side. >> very bullish ishish technically and fundamentally from google. for more "trading nation," two additional segments every single day. go to we republican counting down to the number one top state for business. so far we know georgia number five colorado number four
2:40 pm
utah beehive state, number three. we're going to let you know what state is second ahead. we are all over this market slide, by the way. the s&p 500, pretty much a sea of red. the majority of the names are down. the dow down in triple-digits. we're back after this.
2:41 pm
2:42 pm
2:43 pm
losses across the broad, pretty broad sell-off on wall street. dow off the session lows. hit 161 at the low. now down about 140. the nasdaq s&p also lower, so is the russell backing off from that record high. carl icahn the billionaire activist investor not helping sentiment saying stocks were looking dangerous and overheated. of course the signals with greece these late night talks in brussels aren't exactly making progress. we are one step closer to revealing america's top states for business. the number one and number two
2:44 pm
names. let's get right at it. special correspondent scott cohn is live in the mystery state but he will crown for now i guess the runner-up state. scott? >> reporter: that's right, brian. we're getting a lot of really interesting guesses on twitter and really good guesses. i'm not going to say whether they're right, just really good guesses. the runner-up, state number two. texas, the lone star state, is runner-up this year with 1,580 points. this is the third year in a row for texas as number two. texas was america's top state for business in 2008 2010 and 2012. texas' best category this year -- its infrastructure prp the fine. the finest in the nation with two of the country's busy yers airports, a vital seaport and extensive railroad network. worst category quality much life with the worst rate of health insurance coverage and
2:45 pm
poor air quality. the falling price of oil is starting to take a toll on the economy. the housing market is showing some strain and job growth is slow but unemployment is still below the national average. texas has no individual income tax and no corporate tax. just a state franchise tax that tops out at 1%. the state sales tax -- 6.25% with local taxes pushing it as high as 8.25%. texas's largest private employer is the heb supermarket chain. the largest industry is mining including oil drilling. here's where it gets really interesting. texas missed the number one spot this year by four points. four points. and, yes, folks in texas, we did multiple recounts. four points separate the runner-up from america's top state for business. so, let's take a look at another diabolical hint -- mm mm good. mm, mm good.
2:46 pm
think about that. maybe have yourself a bowl of soup as you consider that. we will have another exclusive twitter hint coming up. >> with that mmm, mmm good i'm thinking -- is that campbell's but campbell's is based in new jersey and there be ain't no way number one is new jersey. right? no way. you arary not going to say either way, are you? >> you get one hint and that was the one hint. we will do it. we will do a special twitter hint @scottcohntv is my handle. during the "closing bell" we will unveil where this is and after that our exclusive study that we've been working on for several months now, you can see how your state stacks up and there is a whole lot more content this year. really interesting stuff about competitiveness. >> there was a recount of pennsylvania. that was the answer. you could say there was a hanging chad but that would be a stupid joke. >> that clues are very cryptic. i find them very hard to figure out. >> i want our viewers to
2:47 pm
understand this, we don't know. >> no idea. >> scott cohn has like a briefcase like chained to his wrist. the producer won't pick up the phone. we have no clue. i guessed wrong. >> the big reveal coming up on "closing bell." which state is number one for business? you've been guessing we've been guessing. the answer and an interview with the governor from that state will be coming up at 4:00 p.m. on cnbc. let's get over to a "market flash." >> truthfully, nobody here at cnbc knows exactly where scott cohn is. i've been trying to figure it out all day but i still can't. the s&p 500 overall is a down day. all ten sectors of the s&p in the red. to the negative side of things. tech and consumer staple stocks are leading the declines. industrials -- or leading. industrials and materials are the worst performers so far. the way things are shaping up in the marketplace, everybody's
2:48 pm
down but some are down worse than others. sara, back over to you. the dow was also down 143 on track for its dayworst day in three weeks. bank stocks have been having a run. is it about to end? advice when we come back on how to play big banks. automotive innovation starts... right here. with a control pad that can read your handwriting, a wide-screen multimedia center, and a head-up display for enhanced driver focus. all inside a redesigned cabin of unrivaled style and comfort. the 2015 c-class. at the very touchpoint of performance and innovation. you used to sleep like a champ. then boom... what happened? stress, fun, bad habits kids, now what?
2:49 pm
let's build a new, smarter bed using the dualair chambers to sense your movement, heartbeat, breathing. introducing the sleep number bed with sleepiqtm technology. it tracks your sleep and tells you how to adjust for a good, better and an awesome night. the difference? try adjusting up or down. you'll know cuz sleep iq™ tells you. only at a sleep number store where you'll find the best buy rated mattress with sleepiq technology. know better sleep with sleep number. you probably know xerox as the company that's all about printing. but did you know we also support hospitals using electronic health records for more than 30 million patients? or that our software helps over 20 million smartphone users remotely configure e-mail every month? or how about processing nearly $5 billion in electronic toll payments a year? in fact, today's xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. with xerox, you're ready for real business.
2:50 pm
2:51 pm
have a look the a the banking index. up 7% so far this year. can the rally continue? let's bring in bob pisani tracking this action. >> and it's been an incredible second quarter. the banks have been the outstanding performer. take a look up over 10%. well outperforming the s&p 500. up 2%. and investors have noticed as these stocks started breaking out a month ago, volume and key etfs like the spider bank etf saw a big surge in volume. what's moving the banks? improved economic data has been the big help. there's been hope that loan growth would improve. that's been happening. it hasn't translated into revenue growth because interest rates are so low. the most important factor has been the belief that short-term rates would move up. most bank loans are tied to the short-term rates.
2:52 pm
investors are trying to figure out if they could continue to chase the rally. deutsche bank made a bull call downgrading citi and goldman sachs for the reason. they acknowledged the economy has improved the capital markets have improved. the huge rally means there's much less in upside. they told me that the fed funds rate move in the direction the fed wants them to move. 0.6% by the end of the year maybe 1.7% by the end of next year, that would provide a significant lift in the bottom line from banks. and in that case the banks can definitely move higher. and i'm dying to hear what mike mayo has to say about that. >> he's bullish. i can give you a hint. over to you, brian. >> no hints, sara. let's bring in mike mayo with clsa. mike, you look at lot of the names, they're soaring, the small and mid cap ones. everyone's rushing to that side of the boat as the rates are expected to rise. is it a bad move or a smart one? >> i think it's a smart move to own bank stocks. as simple as abc and the a is
2:53 pm
for asset quality, which remains very strong the b is for balance sheets which is stronger than they've been in a couple of decades. and the c is for consistency. banks are to have much more consistency, and their earnings results. but i will add to the a, b, c, the letter "v" for volatility. there will be volatility ahead, especially with earnings greece capital markets and regulations. it's not a straight move higher but we do think there is a structural change that's being underappreciated by the markets. and we'd be buyers of citigroup and morgan stanley into their post crisis highs. >> citigroup and morgan stanley are your favorite picks, mike. are these banks, and you talked about the "b," the balance sheets and the "a" asset qualities. are these banks smarter than they were 7 years ago? >> look i've been covering this industry for quarter of a century. and the word "smart" i don't always like to use. but i do like to use the term
2:54 pm
balance sheets, the phrase balance sheet strength. you do have capital that's double where it was pre-crisis. you do have liquidity 50% higher. regulators looking over the shoulders of the banks. so when you look at capital liquidity, earnings stability, additional conservatism i'd much rather own $1 of earnings today than $1 of earnings precrisis. and that's what's underappreciated. >> here's the bear argument. what if the federal reserve raises interest rates and we don't know how the market is going to respond. what if the market and they buy treasuries at the long end of the curve. what if it slows the economy and treasuries are in demand and rates go lower, won't that hurt bank profitability? doesn't that sort of knock off this bullish pace? >> well we're not bullish across the board. and you make a good point. if the fed raises rates and the yield curve flattens that can flatten bank earnings prospects. also, if the fed does not increase interest rates and we're lower for longer with
2:55 pm
rates, that could also hurt bank stock performance. for that reason we recommend owning bank stocks that can work even if interest rates don't go higher, even if the yield curve doesn't steepen. we like having banks that have an extra earnings lever to pull if the environment stays sluggish the way it's been. that's why citigroup is perhaps the best global restructuring story among banks. morgan stanley is midstream with its restructuring, especially in their capital markets operations and their wealth management business. they have extra earnings levers to pull. >> mike mayo we're going to leave it there, we appreciate your time as always. thank you very much. >> thank you. >> morgan stanley and citigroup. stocks in red. we're setting you up for the final hour of trade next.
2:56 pm
♪ ♪ [ radio chatter ] ♪ ♪ [ male announcer ] andrew. rita. sandy. ♪ ♪ meet chris jackie joe. minor damage or major disaster, when you need us most, we're there. state farm. we're a force of nature, too. ♪ ♪
2:57 pm
♪ mamas, don't let your babies grow up to be cowboys ♪ ♪ don't let'em pick guitars and drive them old trucks ♪ boys? ♪ mamas, don't let your babies...♪
2:58 pm
stop less. go more. the passat tdi clean diesel with up to 814 hwy miles per tank. hurry in and you can get 0% apr plus a one-thousand dollar volkswagen credit bonus on 2015 passat tdi clean diesel models. stocks are off session lows but the dow is down triple digits, 135, s&p 500 down .5%. ben willis with princeton securities group. you say there's not a lot of panic selling, more about profit taking. >> it's profit taking. most of the high beta names performing well under the most pressure. you hit materials earlier. the financials, the biotechs this is just profits coming off the table. and once again, unfrnltortunately range bound. the real bottom range is 2075 before that trade reverses. and traders will look to sell it
2:59 pm
back out when you get to 2125. >> just an excuse to sell? >> exactly. drove short covering into the market. as soon as europe closed our market gave most of that move back. so this again, europe gave and greece gave us the excuse today to take profits off the table. >> the dow transports in correction territory. what does it mean for the broader markets? >> well it's coming from the railroad stocks and the concern is on their movement of commodities. and i'm not quite sure how that's going to play out. i think you need to look more at car loads than the value of what they're shipping. so the argument right now, and the reason it's under pressure and the biggest pressure in the transports is on the rail side of the equation. >> and we're also watching obviously, the move in treasuries, going the opposite direction, lower yields. how much is that guiding what's going on in equities these days? >> again range bound. the broader market when you look down six months from now, you've got to look at higher interest rates and higher dollar.
3:00 pm
>> yep. and not seeing that today. a little bit of profit taking. >> exactly. >> ben willis thank you very much. brian, over to you. >> wrapping up with no greece deal. the dow down 140, and the top for business is revealed. all coming up with the close"closing bell" right now. >> hi and welcome to the "closing bell," everybody. i'm kelly evans here at the new york stock exchange. >> welcome back. >> good to be back bill. >> i'm bill griffith here at cnbc headquarters. that, of course, means i'll be on nightly business report on pbs. join us check your local listings. they're running for cover today. we have a bit of a selloff in stocks right now. bonds are higher, dollar lower. all caused in part by comments by activist investor carl icahn that he feels the stock market is overheated the junk bond market he thinks is in bubble territory. and then of course we have those concerns about greece as


info Stream Only

Uploaded by TV Archive on